The Threat That Will Save Europe

For the EU, 2015 was another year of fundamental challenges, with two key elements of European integration – the euro and border-free travel within the Schengen Area – being placed under serious strain. But one key development has boosted Europe's prospects: the threat of expulsion gained credibility.

BRUSSELS – For the European Union, 2015 was another year of fundamental challenges. Two key elements of European integration – the euro and border-free travel within the Schengen Area – were placed under severe strain. And neither is in the clear. Nonetheless, one development in 2015 offers reason to hope that EU leaders will move beyond “muddling through” to implement bolder solutions in 2016: The threat of expulsion gained credibility.

The global economic crisis that began in 2008 exposed the deep flaws in Europe’s monetary union, though it took the near-death experience of the euro crisis of 2010-2012 to force Europe’s leaders to act, by creating a large fund to help struggling countries and establishing a banking union. Even so, more than three years later, that union – which entails supervision by the European Central Bank and the beginnings of a fund for restructuring failing banks, but lacks a common system for deposit insurance – is far from perfect.

Despite its flaws, the banking union helped to keep financial markets calm in the first half of 2015, even as Greece’s new government, led by Prime Minister Alexis Tsipras, challenged a basic feature of Europe’s approach to national financial crises: that recipients of support must engage in belt-tightening. In a July referendum, Greek voters delivered the outcome for which Tsipras campaigned, soundly rejecting the conditions – including strict austerity – which Greece’s creditors had demanded in exchange for a new bailout.

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Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

Well here we are a few days later and to name just one development Austria now has its army at its border amid forecasts of an increase in migrant flows for 2016 onwards

'But the reinstatement of some border controls is merely a temporary measure'.

From the Cambridge dictionary - temporary: not lasting or needed for very long. Well depends on your definition of long. The latest EU proposal is that, if migration problems persist, governments may use Article 26 of the Schengen rules, allowing up to four six-month periods of border control. In this case to run back to back. 2years. Then reality will dawn

'That is why their leaders remain committed to preserving open internal borders, while maintaining a stronger external border'

This remains one of the most deluded comments I have read for a long time. That it can be written at all is the measure of detchement from reality of some in the EU. Schengen has failed and far from relaxing internal borders they are reimposed ever more tightly every day. This will contimnue whilst migrants pile into the EU at 1 million a year with 50% of said migrants being economic migrants.

To focus on only two countries - Greece and Italy

Greece remains porous and the idea Turkey with even more porous borders with what is effectively a non-state can be the thug nasty subcontractor to herd migrants away from Greece is dubious to say the least.

At present migrants of any description get in any old boat available in Libya, another state in conflict, and head for international waters. To then mobile phone for an EU coastguard pickup and onward transit to the EU. This is now so established that there are complaints that over 90 minutes is too long for a pickup

This is external border control. Really

The latest forecast from the German government is another 1 million expected in 2016 with a total of 10 million potentially now forecast over the coming years, again 50% are likely to be economic migrants

Anybody thinking that the EU pubic is going to accept people just walking in year after year is seriously misguided

The repeated banal argument by some economists regurgitated by some journalists ad nauseam that migrants always help an economy is cherry picking the facts they want to see. Data from the Netherlands shows the majority of migrants remain unemployed after 10 years, this is similar to outcomes in other EU countries

It has been commented by Mr Junckers; if Schengen cannot be reinstated then the euro is pointless. Yes Mr Juncker. This is without Junckers acknowledging the structral faults in the Euro

The EU has a major problem and continual messaging that more of the same is the answer whilst highly predictable only increases the distrust of the public - as does manipulated news reporting by a mendacious media as shown by Colognes New Years Eve incident outcome

None of the current practice helps genuine refugees

As for Merkels latest contra-logical statement, one of an accumulating number -
Misbehaving asylum seekers will be deported to the country of origin. Really... Syria, hwo are they going to be deported to what is basically a failed state which is a war zone

"If eurozone membership cannot be taken for granted, if countries that do not abide by the common rules can simply be kicked out, countries will try harder to hold onto it."

Very hasty conclusion... Understanding Greek preference for a left-wing government as a victory of the Euro, is very naive. It is true that all EZ members are now more conscious of the potential prospects of left-wing democratic preferences within national borders.

But valuating this as a victory, of common currency benefits over democratic sovereignty, is a major mistake. The same is true for political irresponsibility of Schengen countries over their external borders. These manifestations of EU biased, undemocratic politics captured by northern rich countries' interests, possibly say that a potentially even more ...structural, i.e., political, crisis of is building up. A crisis of legitimacy of EU governing structure and institutions.

The author seems to believe in a superiority of "economic benefits" that have proved in no position to deliver prosperity and continuously harm it. Economics are losing their primacy in the imagination of Europeans and, even though it has been a near death experience for democratic expectations of the peoples of Europe, such disillusionment is far from a good omen for the current political structure of the EZ and EU.

Hopefully, they will change or disintegrate. Either outcome will be welcome! Optimism over a, supposedly, strengthened EU is completely baseless and a sign of denial...

Excommunication of The Zero could not save The Roman Numerals.
English became the Planet's Lingua Franca, despite Brexit 1588.
Yet, Daniel Gross thinks Greece is the template to save Europe.
Russia is no Greece.
Britain is no Greece.
Germany is no Greece.
Religion perhaps needs its Zero smashing Twin - Infinity is in The Trinity.

Thank you very much Mr. Hurst
Your post was not only long was very interesting. And as I mentioned before you are right to blame the actual state of Europe.
I would like to mention to you that Europe did not begun after the war with the steel and coal agreement. Europe is a social construction which start 2000 years ago, if we like to name it Roman Empire or Roman Empire of German nations or Napoleon Empire or whatever European Union.
It is something meant to live forever whatever syncope should pass.
But to survive it need before everything else to behave like a State.
One of the big mistake was the refuse of the Giscard d'Estaing constitution rejected by (wander!!) the french! Was not probably the best but even Ford cars were stupid at their first beginning.
I wish you all the best.

@portocala
Yes it is interesting that you raise the Roman Empire
Much that is at the heart of modern Europe is Roman. However can I pont out that history is written by the victors. Thus we do not hear much from the Dacians who were resident in what is now Romania. Dacia was subject to genocide by Trajan for its gold, in the same way the Druids were eliminated in Anglesey, Wales for their Copper mines

'After the referendum, German Finance Minister Wolfgang Schäuble suggested that Greece should be offered a “holiday” from the euro – a thinly veiled warning that exclusion from the eurozone was on the table. Clearly, the threat worked.' How very Roman

Obviously in Mr Gros' opinion this is the solution- as he closes with 'And the concrete actions of the last year – notably, the warning that countries that do not follow the rules will be left out – suggest that 2016 will bring more progress, however piecemeal, toward a stronger eurozone and a real political union.' In other words comply or die. No where in this is there faintest idea that it may be the rules that have to change. This is because if it is admitted the rules are faulty the whole construct collapses like a tent. Somewhat like the Roman Empire

Hello portocala mechanica, yes I am in the UK but have lived in the Far East and in the Med. I have also been bombed in a civil war elsewhere

The problem is the EU is a flawed construct

It started under the pretext of a coal and steel trade agreement, mainly I might add to allow France amongst others access to German industrial assets as Germany had lost the war and France was in trouble

It was then used to create the fledgling EEC with the idea crisis would weld it together, a force fit of countries. a political construct not economic

We are a long way from the basic trade agreement

The Eurozone is a common currency area. There is no common currency area which can survive without subsidy from rich area to poor area in it.

The UK and US are common currency areas

In the UK regions such as Wales and the North East recieve central government subsidy to name two regions. In the US states such as Alaska and Montana also recieve support from the central Fed. All the figures are available on the internet. Without subsidy the poorer areas depopulate and infrastructure maintenance collapses

No such wealth or subsidy transfer exists in the Eurozone. The only device to fill the gap is local debt which is what has occurred with Greece. Yes there are problems with Greece but the critical thing is they cannot escape debt if they are in the euro. They are not alone by the way.

Nor can Greece use currency devauation to deal with problems, it no longer has its own currency, it uses the euro which it cannot control

Meanwhile Germany has gained from the euro being lowered in value by the poorer economies in the Eurozone meaning they can export with an advantage. Germany in the euro has an advantages aginst Germany out of the euro using the DMark.

Further when the euro crisis affected state borrowing interest rates this again gave Germany advantage, to the tune of 100 biullion euros on the lending market.

Germany has colossal exposure with TARGET2 the country to country trade credit ledger and this is at risk if the euro fails. Hence Greece was crucifed.

The internal subsidy necessity inherent in the euro has not been resolved and Greek debt will once again grow and Greek economic growth will falter as it struggles to opay down debt. Yannis Varoufakis the ex fin minister for Greece who is regarded as a trouble maker by the EU elite is on record as saying that privately the IMF and the EU do not think the deal with Greece will sort the Greek economy and its debt problem.

Yannis does not think the future is bright for Greece

Thus the EU construct is devisive and protects the strongest and exploits the weakest

As far a Schengen goes - if you delegate the external border enforcement to external border states and they practically cannot secure them then the the only outcome is to revert to state borders. Greece has a porous border with thousands of islands. You cannot expect it to maintain security for the whole of the EU.

Schengen, like the euro has failed. There is the pretense it is a temporary glitch but the reality is it has failed

In short bluster and threatening by central EU authority may in the short term hide the problem(s) but it (they) will return

The Euro and Schengen are just two examples of EU structural problems and the attitiude shown by Mr Gros is symptomatic of the EUs reaction.

The EU is supposed to be a democratic institution and EU politicians and their employees maintaining the public are a problem is not the answer

Finally democratic institutions have evolved to be flexible and to react to events, not be frozen. In many respects the EU is frozen as attempts to change structure law and regulation can be blocked by members, which is exactly what Greece came up against.

In order to cope with major global issues the EU needs to change and much of the EU fights change

To give you another example of unintended consequences, Moldova residents have family links with Romania due to history. thus Moldovians generally can apply for and get Romanian passposts and are then free to migrant anywhere within the EU, typically headijng for Germany and trhe UK. Nothing can be done to stop this under EU rules and changing the rules is contested by states that benefit from the rules in question

Dear Mr. Hurst, I deeply excuse My self I did not know who you are so I checked and found you are English. I could bet on this.
OK, you are not European. and you are absolutely wright in your comment.
I have only one question to you,
I am probably under the influence of the speech Mr. Geert Wilders had in US senate (which I had access in a small circulate language).
So, which European state can stand today alone and survive to the global aggression?
Maybe the management by threat is not a good starter, but is anyway something, if we want to avoid becoming simply monkeys in the economical and social jungle of tomorrow

I wonder how the developing world countries still survive globalization and EU rich countries' citizens have swallowed whole the tail of needed integration because of globalization. My first impression is that this fallacy is partly owed to covered financial imperialism expectations. Nothing else comes to mind....

Border control is required when external borders fail. Cost is irrelevent

Your position is the EZ and Schengen will rebirth. The reality which you deny is both are the either dead or the living dead or a vegetative state. None of the problems that caused the issues have been proven successfully addressed

Still I expect you will get there in time for the funeral, the life support system is still plugged in

In the long run, all of these things are growing pains as the EU member nations work towards an ever better union.

Some things will succeed, some things will be superceded (Canadian spelling)

Although the optics of the Greek situation were initially quite poor, it's coming together nicely. Alex Tsipras seems a willing and reasonable partner -- thank goodness!

I applaud the IMF's calm determination to move things along at best possible speed. That, more than any one thing, prevented an untimely Grexit. Seen in retrospect, all of it could have only happened one way. And so, it did.

A much worse problem than differing applications of Schengen Area rules was the initial non-response to a huge influx of refugees from the Arab Spring nations and later, refugees from Syria.

The lack of an appropriate, unified and timely response to the massive influx of refugees and opportunists, showed that the EU isn't yet ready to lead without U.S. direction. Which is concerning in itself.

And while I happily give the EU a 'B-' for its handling of events so far this decade, on the initial response to the mass influx of refugees, the EU deserves an 'F'.

If it wasn't for the overly harsh and bitter 'austerity' pill that EU nations were forced to swallow, I'd give the EU an 'A' for everything else.

Two of the smartest things done by European leaders this decade were Angela Merkel travelling to India with firm intent to create a huge trading relationship, and David Cameron's invitation to Xi Jinping for a state visit in London where Mr. Jinping spoke brilliantly about our increasing interdependence.

Finally, for those refugees living in Europe lawfully charged and convicted of violent crimes (even crimes as minor as 'hooliganism' with a violence component) the EU should act as one -- deporting those convicted people to their country of origin, or to Cairo with enough funds (or voucher) to get themselves from Cairo to their point of origin. (Forever losing the right to live in the EU) And doing so within 24 hours of the /sentence being handed down by the judge.

That would act as a powerful deterrent to potential criminals and work to prevent serious harm to European citizens.

I am sorry John but you are so far off the mark it is impossible to answer you. I will give you one stat though - it will take the EU 150 years approximately to get the 50% of the year 2015 migrants that are economic migrants - and will therefore fail asylum claim - deported at the current processing rate.

I agree that this is the most likely development as long as we continue our development instinctively, blindly as before.
When crisis is growing, problems multiply fragmentation, nationalism, protectionism is the usual instinctive response.
Unfortunately since today we exist in a fully integrated and interdependent world such moves go against what should happen.
"Globalization", existence in a global, integral system is not man-made, we don't have a choice about it. If we want to continue our evolution, if we want to survive without the usual vicious cycles, revolutions, wars in between changing civilizations we have to learn to adapt to this system.
And such adaptation means full integration.
Of course for that we would need to go above instinctive behaviour using our unique human abilities as critical self-assessment, self-adjustment.

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